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From The Times
November 26, 2003

US threat to cut $300m aid deal

From Tim Reid in Washington
THE Bush Administration moved last night to punish Israel over its settlement-building programme on Palestinian territory and its construction of a barrier through the West Bank.

After months of threats from the White House, sources within the Administration said that Washington was planning to deduct up to $300 million from a multi-billion-dollar package of loan guarantees. One official told Reuters that the figure was $289.5 million (£170 million).

Although neither Israel nor Washington would comment officially on the punitive measures, it is believed that Israel agreed on the final figure after months of talks between Condoleezza Rice, President Bush’s National Security Adviser, and Dov Weisglass, Chief of Staff of Ariel Sharon, the Israeli Prime Minister. The two met at the White House yesterday.

It was unclear last night whether the withdrawal of loan guarantees was in response solely to the settlement programme, or also targeted at the construction of the West Bank barrier.

Mr Bush signalled a toughening of US policy last week. Speaking at the Banqueting House in London, he said: “Israel should freeze settlement construction, dismantle unauthorised outposts, end the daily humiliation of the Palestinian people, and not prejudice final negotiations with the placement of walls and fences.”

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